Customer Value: Narrowcasting vs. Broadcasting

The traditional model for customer acquisition has essentially been a broadcast approach, reaching a large audience generally descriptive of the customer base. Contrast this with what is sometimes described as “narrowcasting.”

Keeping it Simple: Target the Customers Who Have Greater Potential Value.
It’s not enough to have a great story about the “broadcast market” we wish to identify customers from. Today, marketers would do well to more narrowly (thus, “narrowcasting”) define not only the customer, but the most valuable customer. In our experience, the minority of marketers have a shared definition of the customer and of the most valuable customer across the organization.

To achieve this, we can determine customer data attributes that are predictive of customer value. Under this strategy, we go beyond trial (conversion) but begin with the end in mind … acquiring customers who have the greatest potential to become more frequent and more loyal customers in the first place.

This is entirely feasible with the right data set and a modeling exercise against the highest value segment of the current customer base.

Once this “narrowcast” target is formally defined by attributes that are most predictive of their future buying behavior and spending proclivity, we can begin to define the advertising and marketing that would have the greatest effect on the brand.

Saturation Marketing to the Highest Value Targets
While many brands are still struggling to implement and execute true “narrowcast” advertising, there is ample opportunity this approach affords them. Consider the impact of acquiring a base of customers who are statistically more likely to spend more, and purchase more often. Not only because they possess the means or discretionary income, but possess other necessary factors to actually spend in the category, and do so more vigorously.

Profit per customer goes up dramatically when you weed out those more likely to buy once and then stop at the trial stage of a customer relationship – and instead acquire more customers with all of  the necessary attributes to become “best customers.”

A Direct Approach to Brand Investment: Narrowcasting
Given a narrowcast approach can help a brand be selective in cultivating the customer base that transforms the value of the business, and enables marketers to produce more predictable sales, the challenge in some organizations is finding the budget to do this – as it’s not a traditional budget item. Remember, at one point search marketing wasn’t either …

For brands looking to grow smarter and more reliably, one solution that can work is to allocate a portion of the “branding” budget to delivering awareness generating messages – with a reasonable call to action, to stimulate trial, not in a broadly targeted group (“banded income” is a typical criteria) but on a predictive basis. Models can help in selecting the target and matching back to postal, email addresses, and display targeting cookies can produce a rich, immersive campaign focused only on the individuals who a brand in your category really must reach and convert to perform at a high level.

Consider the impact it can have on customer value.

Research for Mike Ferranti blog No. 2

Note, in the above, the customer count is a LOT lower than the broadcast approach. This new approach does not replace, for example, national television in terms of reach. However, we note the rather overt shift between customer value from the first chart. This is what may be expected of narrowcast campaigns that have been intelligently constructed and tested.

This is a different view and brings some of the techniques from programmatic advertising, database marketing and predictive analytics to bear on the customer acquisition challenge. But the results can be impressive, and marketers will ultimately make the majority of their advertising decisions through a more “narrow” or focused lens as the technology grinds forward in efficiency.
To be sure, many firms are already executing these strategies today. These firms are building competitive advantages through a more robust, valuable and loyal customer base that will endure for many years into the future.

Author: Mike Ferranti

Mike Ferranti is the founder and CEO at Endai Worldwide in New York City. In this blog, he plans to offer ideas and perspective that energize, stimulate and motivate performance through the lens of his nearly 20 years of data, technology and marketing experience. Mike draws upon the logical, cultural and subject matter expertise in digital and data-driven marketing—with an occasional parallel between business performance and athletic performance.

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